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Business Level Strategy SAMSUNG: Product Differentiation Strategies During Its Lifetime
Business Level Strategy SAMSUNG: Product Differentiation Strategies During Its Lifetime
Narrow buyer
Target Market focused low-cost focused
differentiation
segment or niche
Difficult to implement
Firms aiming to do this are often stuck in the middle
Firm’s products are too costly to compete with low costs provider’s product,
and too undifferentiated to command the price premium gained by the
differentiated firm
A variety of internal and external factors have helped Samsung achieve this
desirable position
Differentiation
Faced with the challenge that the DRAM industry might fall into a commodity trap
and therefore be subject to cutthroat price competition and price fluctuations,
Samsung developed the below classification of broad product differentiation.
Cost advantage
Price advantage
Samsung was able to command a higher average selling price as compared to its
competitors because of its
1. Ability to offer customized memory chips that no other manufacturer could offer
allowed them to command premium pricing on these products
2. Better quality control that lead to reliability enabled Samsung to obtain an average
price premium of 1% average price
Since Samsung was able to create and maintain technology leadership it was able to
earn a very high premium at the initial stages of a new product to recover its initial
investment and if competitors began producing the same product it could aggressively
lower prices to make it difficult for followers to stay in the competition.
Samsung has pursued its differentiation strategy in a way that it has allowed to lower
their cost structure at the same time. This may pose serious threats to both the cost
leaders and differentiators over time.
http://research-methodology.net/samsung-electronics/
http://www.networkworld.com/community/blog/samsung-its-lonely-top
http://www.iec-meter.com/blog/post/597.html
http://www.samsung.com/us/aboutsamsung/corporateprofile/history03.html
DRAM
The world's number one chipmaker, Korea's Samsung Electronics, announced
Thursday that it became the first in the world to start mass producing the 20-
nanometer class Dynamic Random Access Memory flash chips.
The leading chipmaker says the latest DRAM has the same capacity as the 30-
nanometer class DRAM introduced in July last year but the latest technology
offers a 50 percent improvement in productivity and reduces energy
consumption by 40 percent.
This has placed Samsung's technology around six to 18 months ahead of its
Taiwanese and Japanese rivals which still produces 30 or 40-nanometer class
chips.
The industry's second-largest chipmaker, Hynix Semiconductor also based in
Korea is trying to catch up as it plans to develop and start producing 20-
nanometer class chips by the end of this year.
Meanwhile, the world's number three DRAM maker, Japan's Elpida Memory
announced earlier this year that it will start producing 25-nanometer DRAMs but
that still hasn't happened yet.
Meanwhile, Samsung also began operations of the world's biggest memory
fabrication facility, the Line-16 which is producing NAND flash memory devices
and boasts a size equivalent to 28 soccer fields.
Experts predict Samsung's recent success of producing the 20-nano class DRAMs
will redeem the company's slowed-down sales during the second quarter of this
year by boosting its mobile and semiconductor sectors.
Moreover, the company's Chairman Lee Kun-hee vowed to maintain its
leadership in the global memory chip sector on Thusday.
Echoing the Chairman's words, Samsung continues to stay ambitious and says it
will begin production of more advanced flash chips using a 10-nanometer
process next year.